Featured Politics News

Group faults Dogara, explains economic impact of TraderMoni

By Thimpson ABISOLA

The Global Economic Policy Initiative (GEPIn), a policy group has faulted Yakubu Dogara, Speaker of the House of Representatives claim that the TraderMoni scheme is vote buying.

Dogara had alleged that the TraderMoni scheme was a form of vote buying as it was still ongoing months before the general elections.

GEPIn’s President, Bernard Okri, in a statement on Wednesday in Abuja said that TraderMoni, which was part of the Government Enterprise and Empowerment Programme (GEEP) commenced in 2016.

He said that the TraderMoni scheme entailed the provision of N10, 000 in interest free credit to table top traders.

Okri said that beneficiaries had up to six months to repay the loans and thereby qualified for higher sums of money.

He explained that since the launch of the scheme which had been received by great enthusiasm by the beneficiaries, there had been various reactions including that of Dogara.

“It is difficult to understand how money that will be paid back can be considered as bribes, TraderMoni holds many benefits for the country; TraderMoni is part of a broad ranging financial inclusion strategy of the Federal Government.

“Financial inclusion entails making financial services available to

households and businesses in an affordable way.

“Studies have shown that access to financial services helps to reduce poverty by facilitating payments and savings for households and businesses as well as enabling households to smooth out expenses and access services like micro-credit, micro-insurance and pensions.

“It also helps to improve lives, spur economic activity, reduce the cost of financial transactions and improve the delivery of social services, especially government payments.’’

Financial inclusion also helps micro-enterprises to access cheaper credit and invest in order to grow their businesses,” he said.

He said that with up to 41 per cent of Nigerians lacking access to formal financial services, there was the need for urgent action.

According to him, financial exclusion in Nigeria is quite high compared to countries like Ghana where the rate of financial inclusion increased from 29 per cent in 2011, to 58 per cent in 2017.

Okri said that in South Africa which still suffered from the legacy of apartheid, up to 75 per cent of the population had bank accounts as compared to 46 per cent in 2004.

He said that in Kenya, there had been a drastic increase in financial inclusion with up to 75 per cent of the population having bank accounts, which was a 50 per cent increase over the past 10 years partly due to the impact of digital payments systems.

“The common denominator in the examples of South Africa, Ghana and Kenya is that their governments took innovative and urgent action to speed up the pace of financial inclusion.

“Empirical evidence from random controlled trials shows that small businesses benefit from increased access to credit because it enable them to invest in assets to expand their businesses, diversify into new products and cope better with business risk.

“Indeed, the relatively longer tenor of TraderMoni loans means that small entrepreneurs can venture into expanding their inventory and/or production, given Nigeria’s relatively poor performance in financial inclusion.

“Government has taken a strategic and innovative approach to ramping up financial inclusion in Nigeria.’’

He said that studies had shown that microcredit worked well when the participant already had an existing business and when interest rates were not exorbitant.

According to him, TraderMoni meets the above requirement given that participants not only have existing businesses but they are actually part of established retail chains, albeit at the lowest end.

The GEPIn president said that the interest free credit was to be contrasted to interest paid on loans from microfinance banks which attracted interest rates of up to 30 per cent to 60 per cent.

“Participants get paid by electronic cash transfers and are required to open bank accounts including Know Your Customer (KYC) requirements and Bank Verification Number (BVN) at point of requesting additional loans.

“This innovative micro-credit scheme will also help to avoid dependence on unreliable, insufficient and expensive informal mechanisms which traders currently rely on.

“As a micro-credit scheme, TraderMoni is a good starting point for wider economic inclusion as the enrolment and data generated will propel the movement toward micro-savings, micro-insurance, micro-pensions and micro-payments for services like health provision.

“It will also encourage a second generation of innovative business ideas such as micro-leasing for ‘okadas’ and solar power.

“This will be backstopped by the fintech arrangements being used to process TraderMoni loans such as Eyowo,” Okri said.

 

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